As the world order we know changes around us, China seems poised to take over the United States’ mantle as the preeminent global power…with all the unpalatable realities of global hegemony and heavy resonsibilities of global leadership. Is China ready for it? What internal anxieties are behind its triumphalist rhetoric? Will the world need to adapt to different kinds of global influence and soft power, based on different cultural values and behaviours?

This report summarises and expands on the main themes of a recent presentation at the Australian Institute of International Affairs, ‘In Two Minds: China’s hopes and doubts about its world role’, by the China Institute’s David Kelly.

The report does not necessarily represent InterMondo’s views, which are added in italicised text.

 Has China really ‘arrived’, or is it a house of cards?

The ‘two minds’ confronting China today concern whether China has taken on the mantle of global leader or is moving towards that role in the future. One mind says that China has really arrived. China now has global reach in terms of hard power. The second mind says that China has not secured its place and is at risk of overreach. There are unmistakeable signs of this, most powerfully seen in the One Belt One Road initiative rolling out across high execution-risk countries.

Considering what the USA’s place in the world has meant in real terms, China is in no place to take it on or take it over.

China’s global messages have a domestic undercurrent

Like any country, China’s global messaging is pitched as much to its in-country audience as a global one, framed in media rhetoric like ‘The World Awaits China’s G20 Solutions’. It’s more than taking it with a grain of salt. China’s geopolitical rise confirms its serious intent. But the inflated rhetoric needs to be understood in from the context of domestic events and internal discourse about its place in the world.

China’s global rhetoric speaks to its domestic audience about what China seeks to do to take its rightful place in the world, expand its influence and build domestic capacity through big science, research, education and technology.

InterMondo: At the same time, China’s internal audience is increasingly a global one, with a voice that is heard in and interacts with different global and domestic settings. China’s global rise and the reach of its diaspora make the stakes – combatting internal tensions and weaknesses – dramatically higher and deepen the impacts of its global rhetoric.

China’s soft power: what it means and how it will evolve is not clear

Does China exercise soft power? The jury is out. The concept of ‘soft power’, coined in 1991 by Joseph Nye (former US Assistant Secretary of Defense), has been deeply popular in China. It resonates with Chinese people’s desire for China to return to its ‘rightful place’ in the world and that, in critical senses, it has not been seen as on the same level as the US. What is soft power? Soft power is best exemplified by the power of love or desire for your cultural goods, allowing a certain accommodation to – or grudging endurance of – your other manifold faults. It is when your rivals and partners do things with you because they want to be associated with you. If a nation gains your support because they have invested heavily in you or you are indebted to them, you are not exercising soft power. A flaw in China’s approach to soft power is the conflation of soft power and propaganda. Until people widely tap into China’s civil society, it will not achieve it.

InterMondo: Not everyone views China’s conflation of soft power with propaganda as a flaw, or consider that certain forms of propagandising (common across many cultures) undermines China’s soft power intentions. China may also be redefining and exercising soft power in a long game unfolding in regions like Africa and Latin America. How this is playing out and how other cultures, nations and regions perceive soft power and is still flying under the global radar. China may not offer music or craft luxury but it offers educational opportunity, technology, financing and business leadership that people in the developing world are eager to access to link into, learn from and leverage to benefit themselves. China has now, for instance, overtaken the UK and the USA as a higher education destination for Africans, and an accompanying rise in Chinese language studies.

With its meteoric economic and geopolitical rise, China risks stumbling in a minefield of ‘traps’

The Kindleberger trap

What will happen if China rises to global prominence without taking on the role of global provider of public goods? This could give rise to the ‘Kindleberger Trap’, which asserts that a rising power cannot afford to withhold providing public goods. Named after Charles Kindleberger, one of the architects of the Marshall Plan, it arose after the First World War when a rising United States failed to step up to fill the void left by the waning imperial powers. Economic collapse, genocide and global war ensued. With parallels between China and the United States today and Britain and the USA between the wars, the Kindleberger Trap resonates deeply in China and became a significant talking point. China faces a complexity of policy decisions about reaching a post-Kindleberger Trap situation without world order collapse, so this question will probably circulate for some time around global peacekeeping, environmental repair, upholding globalisation and the provision of international credit.

InterMondo: This thinking was seen President Xi’s declaration about the Paris climate agreement after Donald Trump pulled the United States out. Since providing public goods requires that everyone benefit and entails multiple partners, given that China does not have allies or partners as understood in today’s world order there are profound questions about how it would achieve this.

The Thucydides Trap

President Xi has been especially vocal on the Thucydides trap, code in China for various deep policy dilemmas. Derived from the disaster Sparta brought upon itself as a rising power that was crushed by Athens in the 5th century BC, the Thucydides Trap declares that a rising power will eventually come into armed conflict with the established powers. In China there is no appetite to fall into this trap, either as a winner or a loser.

The Thucydides Trap: a zero-sum game mentality based on a Western legacy of military conquests -Ang WeiWei, Director Institute of China Studies, Fudan University.

InterMondo: This dilemma can be seen in China’s brinkmanship in the South China Sea and its response to the ruling by the UN Permanent Court of Arbitration that it has no legal basis for its territorial claims in the region. As far as the Thucydides Trap question is concerned, this may exemplify one approach to ‘no conflict, no agression, win win’ , which avoids war in the conventional sense but brings low-level agression, disruption and definite winners and losers.

Can China pull past the middle income trap? (Photo: Li Min, China Daily)

The Middle Income Trap

Argentina and Brazil led the field in capitalising on their comparative advantages to reach economic prosperity and get stuck there. The middle income trap is much debated in China as a genuine economic threat that would bring, if not collapse, stagnation and political instability.

InterMondo: Like Brazil but less glaringly, China also has deep economic and (re-emerging) social inequality to contend with, possibly contributing to conditions that lead to a middle income trap.

The ‘China Solution’ to the world’s woes

China offers itself as holding unique answers to intractable economic and governance problems that other countries or cultures can’t resolve. The ‘China Solution’ could be said to arise from a strengthening internal discourse about China’s place in the world, its right to be heard and its self-perception about its unique qualities. President Xi evoked this vision and the principle of providing public goods at the recent G20 summit in Hamburg, evoking the provision of public goods, stating that ‘we should and must lead the way, support the multilateral trading system, observe jointly established rules and, through consultation, seek all-win solutions to common challenges we face’.

China has a right to be heard

You will hear this narrative echoing through much of China’s discourse and actions globally over the past 10 years. This glorious, ancient civilisation and its peoples, humiliated by Western imperial powers, is now returning to its rightful place. China’s ‘right to be heard’ brings with it, however undeniable paradoxes:

China has been humiliated…as have many other countries in its sphere of influence

Accepting that China has been humiliated long enough at the hands of colonising powers means exending the same logic to other countries in its sphere of influence. Vietnam and the Philippines, who were colonised where China was not, could be said to have even stronger claims for their right to be heard. Over time, this premise for China’s special right to be heard will run out of steam.

InterMondo: The ‘humiliation’ narrative could have a longer shelf life if framed by its having ‘a centuries-long history of being a place the west outsources its misery’, to quote a contribution to a discussion forum about shoddy workmanship in the PRC. Time and initiatives like One Belt One Road will tell whether China will forfeit the ‘humiliated nation’ card by outsourcing (and internally contracting out) its own misery.

China’s self-sufficiency

China projects itself as a self-sufficient society, a popular narrative that feeds into and sustains its inbound and outbound foreign investment and education strategies, and domestic sustainability. Yet elsewhere, Chinese people’s values and behaviours demonstrate otherwise. If China were self-sufficient, why else do Chinese parents send their kids to school and invest in property overseas? The self-sufficiency narrative is a dead-end narrative as full self-sufficiency is impossible. Importantly too, it does not hold against ‘China’s right to be heard’ and its efforts to wield geopolitical, economic and cultural power. All of this requires an audience, a constituency and a consumer base. This goes against the core point of self-sufficiency.

Herald of the high frontier

China’s ‘herald of the high frontier’ narrative speaks to what China seeks to do to expand its influence and build domestic capacity through big science, research, education and technology. In geopolitical terms this has its limitations, as China is bound by the global order and its right to access across the division of territories.

InterMondo: China has reforged new frontiers, starting with ‘too hard basket’ regions that other countries have retreated from or hesitate to engage with, and building on this to move into established settings. A powerful example of this is Haier Group, which has the world’s largest share of white goods. From a small domestic, then South East Asian, then European base, Haier moved into the United States with its record $54 billion acqusition of GE Appliances.

Ambition vs capacity and others countries’ rights

China demands its institutional right to be heard – to be a part of sovereign bodies, not just as a member, but as a powerful member, such as through scientific research and educational leadership. This should be understood and taken seriously. But other questions should flow. Do not other countries have such rights? China also faces an accelerating dilemma of how to balance ambition and capacity, since it has moved so far in such a short time.

‘The Belt and Road is how’: promotional video that may be derided with some audiences as crude and disingenuous propaganda but reach more receptive audiences elsewhere.

One Belt, One Road – what is it about, where will it go?

Multi-headed policies like One Belt, One Road (OBOR) operate to shore up domestic power and compensate for internal crises (power struggles within the Communist Party, systemic corruption, rural poverty, inequality in education access) through long-term processes like driving up world demand and global indebtedness to China.

Self-reinforcement from the centre

OBOR is rolling out externally to resolve internal setbacks. This approach is a slippery slope, with the backlash against globalisation, geopolitical risk, phenomena like Brexit and the Trump adminstration and China’s own vulnerability to overreach to contend with.

Belt and Road is portrayed as multilateral but it’s not

OBOR is really a collection of projects, reflecting China’s traditional, centrally directed, ‘projects’ approach to economic engagement globally. That is why the Australian government is cautious about signing up to OBOR.

Reining in China’s galloping expansion

Globally, China is owed 28.7 trillion in household and corporate debt so no-one is prepared to directly challenge OBOR. However, China is less likely to overreach as it reins in its galloping expansion and it gains maturity in international investment and return-on-investment approaches increase. It remains to be seen how this will play out for OBOR.

There may be gaps in the road

Pakistan is strategically crucial to OBOR. The land and sea corridors of the China-Pakistan Economic Corridor need to be secure. But volatile Pakistan is a security and financial risk. If this becomes untenable, OBOR will go virtual. China is also unhappy about Qatar’s current isolation in the MENA region and how this may affect its ability to fulfil OBOR.

China’s project system may clash with others

China is not alone in having a ‘project’ system. The UN also has a project system. If China steps into the UN space, how will this cohere with the UN way of doing projects?

InterMondo: This question becomes more pressing when China’s clashes with the United Nations around Chinese exceptionalism and global provision of public goods are taken into account.

Choppy waters ahead in the Korean Peninsula and South China Sea

North Korea is deeply uncertain. Official channels and media like the China Dailyportray a positive scenario. Other commentators consider that now it is a clear strategic liability, China should cut its losses with North Korea now after following the wrong policy for the past 50 years. Political establishment figures say that China’s position with the South China Sea is too expensive to maintain, that China is politically isolated and it has not won the sovereignty war. Doing this, however, presents a dilemma to the political centre, which is embedded in a policy of ‘we cannot afford to do this. South China Sea disputes are likewise portrayed as huge successes, and victories for Xi Jinping. No states have signed up normative to China’s actions in the South China Sea but no-one has been able to confront China and chequebook diplomacy has bought acquiescence.

InterMondo: China’s influence in the South China Sea also depends on securing its sphere of influence in the Indian Ocean, where it has been undertaking the costly exercise of expanding its commercial and military networks. Connecting the two regions, China’s access to the Middle East also depends on its securing the China-Pakistan Economic corridor, which remains volatile.

Speaking with one voice or a chorus of consensus?

China may seem to speak with one voice. Dissent is overruled. But there needs to be more voice on policy and China’s trading partners should not take on face value the chorus of consensus coming from the media.

There is a narrative that says those who say that the one-party state is destined to crumble are historical nihilists who have been indoctrinated by western thinking. In China at a rhetorical and historical level, there is diversity, with satellite parties that go back to the 1930s and 40s. However, any attempt to build up these parties into meaningful opposition is highly improbable and the Chinese state is more centralised today than in the past 30 years.

Concluding reflection

China’s triumphalist rhetoric points to lack of preparedness for global leadership and should not be taken at face value, particularly given China’s vulnerability to overreach and impending dilemmas of drawing down from its strategic gains to counterbalance domestic insecurities. Deng Xiao Ping’s words that China should ‘hide one’s light and bide one’s time’ ring true for gauging the strategies and tactics of China’s long game in a changing world order.

Anna Ridgway, Director at InterMondo, provides expert communications support with a cultural focus to help business and people be more effective working in culturally diverse settings. Anna lived and worked in Japan and El Salvador and brings to her services a keen eye for the effects of geopolitics on business in a globally connected world. Contact Anna to find out more.

Reading list available upon request.